Thursday, 13 February 2020
Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019; Second Reading
( I'm very pleased today to speak in support of yet another piece of legislation, the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, that the Morrison government has brought forward to ensure that the superannuation contributions that Australian workers earn are working in their interests and growing their retirement incomes. Over the past year, the Morrison coalition government has taken strong action to protect Australians' compulsory superannuation and ensure they're paid the superannuation they're due. We know that putting a portion of your income from your pay packet away every fortnight is an important sacrifice, and we have a duty to ensure that when we're locking away a portion of people's income as we are that that superannuation is well looked after by funds. Indeed, late last year the parliament passed the Treasury Laws Amendment (Putting Members' Interests First) Bill, an important piece of reform which prevents young superannuation scheme members and those with low balances from having those balances eroded by fees for insurance products that they may not necessarily require.
As a younger person myself, I have relatively recent experience of setting up superannuation accounts and trying to keep track of where my super is, of having a number of different accounts with different funds, of having fees taken out at a rapid pace each year and of finding myself with not much in those multiple superannuation accounts at the end of the day. It can be confusing and time consuming to understand what is happening with superannuation balances that younger people such as myself may have from various casual or part-time jobs they might have had while studying or starting out in the workforce for the first time. So I think it is really important that we as a government are taking action on things like this, to ensure that superannuation is a transparent investment, that it is an accountable investment and that the hard-earned wages of workers are well looked after by funds. The putting the interests of members first bill I referred to earlier was, I think, aptly named, because we really are putting the interests of superannuation fund members—workers—first. I will get to that a little later, reflecting on some of Labor's contributions to the debate on this bill.
With over 15.6 million Australians with a superannuation account and around $2.9 trillion worth of superannuation savings, making our superannuation system work for members is part of the government's plan for a stronger economy and, quite frankly, is just a good idea. So I'm very pleased legislation that passed the parliament last year will prevent younger people, in particular, from being taken for a ride by super funds locking them into insurance products that they don't need. And further to that, the last parliament passed a package of government legislation to ensure employers can no longer hide from their obligations to pay employees their full superannuation entitlements, which brings us to the bill that is in front of us today.
The ATO has previously found that around five per cent of compulsory superannuation obligations go unpaid. In financial year 2015-16 that amounted to around $2.8 billion of workers' money which should have been paid into their superannuation accounts and, hopefully, grow over time but didn't. The laws that passed the parliament early last year gave the ATO the tools it needs to detect future noncompliance and punish employers appropriately, including, where necessary, criminal sanctions for the worst cases of offending in this area.
On some occasions, superannuation guarantee underpayment is deliberate. That's why the government have taken strong action, not only to detect this occurring but to put in place very serious sanctions for employers engaging in that behaviour. That is why it is quite disappointing to hear from the Labor Party that they don't think we are necessarily being as tough as we could be in this arena. On the contrary, the legislation that we have put in place will ensure that Australian workers are paid their correct dues in superannuation.
But we also recognise that there may also be inadvertent mistakes made when paying superannuation as the result of, say, poor payment systems or in a stressed business situation. There are some instances where underpayment is accidental. Regardless of the motivation, in all cases it's the employees who will miss out if their employer hasn't been paying all of their super. Because of the recent actions taken by the government, new visibility into payment of superannuation guarantees, combined with serious financial and legal consequences for noncompliance, will all but eliminate future nonpayment, and this is a fantastic thing for Australians.
The bill that we're debating today will provide a pathway to recover previous nonpayment and incentivise employers who have underpaid in the past to come forward and make good what they owe to their employees. It's not about giving anyone a free pass; what this bill will do is ensure that employees who might have been underpaid in terms of superannuation by their employers in the past can be reunited with their superannuation guarantee.
There have been some, quite frankly, puzzling contributions from Labor on this bill—the party previously known as the party of workers. I'd just like to reflect on some of the things that they've said this week: 'Safe and secure superannuation is important to the wellbeing of all Australians,' one senator contributed. Well, if this is the case, then why don't Labor support the thousands and thousands of workers not getting paid the super they are owed? Why don't they support the measures that we are discussing here today which will ensure that these workers are reunited with their superannuation? More importantly, why is the party that purports to be the party of the worker attempting to obstruct workers from just getting what they're owed? Why doesn't the opposition want the $2.8 billion that the ATO has estimated was denied to Australian workers in just one financial year to be reunited with them?
I don't want to get too off topic here, but there was another contribution that I heard late on Tuesday afternoon from a senator who said: 'This government needs to be the tough cop on the beat with regard to this legislation.' The opposition senator thought that, in providing this amnesty—the amnesty that is the subject of the legislation that we're debating here today—we're being soft. I find it intriguing that the opposition want us to be tough when it comes to this legislation—their own definition of tough albeit. They want us to be the tough cop on the beat when it comes to superannuation, but have a completely different opinion when it comes to ensuring the integrity of unions: indeed, the opposition voted against legislation to ensure that registered organisations merely obey the law. So, there's an interesting hypocrisy there.
Labor have made reference to circulating an amendment to this legislation and, regarding that amendment, I will just point out: this legislation's already gone through two committees, neither of which recommended this amendment. It's had ample time to be dissected and analysed and, as a relatively new senator to this place, I can't help but reflect that this chamber is meant to be a chamber of scrutiny. That's what the Senate, as the state's house, was designed to do. But, having a bill that has gone through the committee process and not had amendments suggested, and for us to then show up here to debate this legislation this week and have this amendment on our desks, quite frankly, is not really consistent with my definition of scrutiny.
The amnesty legislation that we are discussing here today is designed to encourage employers who were not compliant in the past to come forward to ensure employees receive the superannuation they're entitled to. I reference the developments that have been made in this area to ensure that employees are appropriately paid their superannuation—technology has come a long way in this regard and it is quite exciting. With the advent of Single Touch Payroll and real-time reporting to the ATO by super funds, unscrupulous or sloppy employers will be caught. As I said, that is great for detecting underpayment in the future, but these measures are forward-looking; they don't address historical underpayment.
Reuniting as many workers as possible with the superannuation that is rightly theirs is the priority, so this amnesty is a once-off opportunity for businesses to come forward, do the right thing and wipe the slate clean. To be clear: the amnesty only provides a one-off waiver of charges which would otherwise be paid. It does not reduce employees' entitlements by a single cent; everything that an employer owes an employee must be paid. Don't listen to what those on the other side will tell you. What we don't want is for employees who have been underpaid in the past to miss out on what they're owed just because their employer is taking their chances on getting away with historical underpayment. As I have said, we want to reunite people with the money they are owed as soon as possible.
Legislation to implement the amnesty when it was first announced lapsed in the previous parliament. From 24 May 2018 to six months after this bill receives royal assent employers are able to come forward, disclose nonpayment or underpayment of the superannuation guarantee, pay their workers what they are owed—with significant interest—and avoid the usual penalties and fees that would apply. They are also entitled to claim a tax deduction for the amounts they pay during the amnesty period. Importantly, employers will not be able to use the amnesty if they come forward only after the ATO begins investigating them—they're not getting away with it. This bill ensures those employers who came forward in good faith when the amnesty was first announced are covered by the amnesty. So it really must be legislated as a matter of urgency. Since the introduction of the amnesty over 7,000 employers have come forward. These employers cannot receive the full concessional treatment under the amnesty until it's legislated, and the payments of previous superannuation guarantee shortfall are not tax deductible until legislation—the legislation in front of us today—passes. That's why it is, quite frankly, urgent legislation that this chamber should be addressing.
Treasury estimates that a further 7,000 employers will come forward once the tax deductibility of the amnesty is legislated. It doesn't let employers off the hook and it doesn't leave employees worse off. The amnesty is exclusively designed to benefit employees. Anyone on the other side who tells you otherwise is, quite frankly, fooling themselves. Employers will get the benefit of the amnesty only if they pay their employees' superannuation guarantee entitlements in full. It simply provides an opportunity for employers to review their compliance history, come forward in good faith and pay anything they owe before the ATO begins using its new enforcement tools. Employers with historical superannuation guarantee underpayments who fail to voluntarily disclose the underpayments during the amnesty period and are subsequently found to be noncompliant by the ATO after the amnesty period will be subject to a minimum penalty equal to 100 per cent of the superannuation guarantee charge. This penalty and the underpayments are not tax deductible.
Of course, nobody wants to be in a situation where an amnesty is required to get people to follow the law. But this is a strategy which is used successfully on occasion by various regulators and authorities—even police forces, when we look at amnesties for illegal firearms, whereby dangerous weapons can be taken out of the community, rather than having people hide them around the house or in the back of the shed. The important thing with this amnesty is that we've already legislated and put into place new measures which will prevent future noncompliance. It's not an opportunity for rogue employers just to avoid a penalty and then continue their previous malpractice. If they do, they will get caught.
The government's action to crack down on superannuation guarantee noncompliance complements reforms to protect inactive low-balance superannuation accounts from undue erosion and to put members' interests first, as I said in my opening remarks. As a result of these actions, the superannuation of Australians is better protected from excessive fees, unnecessary insurance premiums and inefficiencies from multiple accounts. And, for the first time, the ATO now has the ability to proactively reunite Australians with their inactive low-balance accounts. I congratulate Senator Hume and Minister Sukkar for the important work that they are doing in this area to ensure that superannuation as a concept is a good value-for-money proposition to the Australian people. I commend this bill to the Senate.